“If I was going to give it a grade, I’d give it a B,” Munster said Wednesday on Benzinga’s Pre Market Prep. “If I was going to give the setup a grade, I think it’s a B-plus going in the next few months in anticipation of this next phone. It's still all about the iPhone 10 and how growth of the iPhone 10 goes from low single digits to low double digits over the next several quarters.”

Even as the iPhone remains a catalyst, Munster is shifting his attention to the company's services line, whose importance he has long stressed.

“What more than made up for that was the services business that was in line with the Street but grew at the same rate as it did in December,” he said. “That business is about twice as profitable as the hardware business more predictable, and investors should like that.”

Suppliers with exposure to the non-iPhone lines, such as air pods and watches, are thus positioned for stability.

Justifying Price Action

Shares plunged as much as 3 percent in after-hours trading, and Munster said the generally mild reaction indicates investor emphasis on the upcoming iPhone X product cycle.

“I think any investor who was owning it before yesterday wasn't owning it for the March quarter or June guide, they're still owning it for the hype of anticipation going into the next cycle, and that’s still intact,” he said.

Citing a catalyst in the upcoming WWDC developers conference, he confirmed his optimism that Apple shares will continue to rise. However, he anticipates a stall in share growth in the immediate term.

“We’re still setting up well for iPhone growth to return, and I think the bigger question is what happens when we get into August ahead of this anticipation that’s fully baked in,” Munster said. “I think I could see the stock taking a pause at that point for a few months and part of the reason is I think you’ll start to see a shift in how people view this and start to be concerned about what the tail of the iPhone 10 will be in the March and June quarters of 2018.”

Apple will also continue to see challenges in emerging markets, as Munster said it's still holding up India as a big growth opportunity but is suffering in China as consumers shift to lower-priced competitive products.

Apple shares were trading down 1.3 percent in the pre-market session at $145.68.